Wyoming State Income Tax

What kind of tax will you owe on Wyoming business income?

Most states tax at least some types of business income derived from the
state. As a rule, the details of how income from a specific business is taxed
depend in part on the business’s legal form; more particularly, in most states
corporations are subject to a corporate income tax, while income from
“pass-through entities” such as S corporations, limited liability companies
(LLCs), partnerships, and sole proprietorships is subject to a state’s tax on
personal income. Tax rates for both corporate income and personal income vary
widely among states; corporate rates, which more often are flat regardless of
the amount of income, generally range from 4% to 9%, and personal rates, which
generally vary depending on the amount of income, can range from 0% (for small
amounts of taxable income) to around 9% or more in some states.

Currently, four states, Nevada, South Dakota, Washington, and Wyoming, do not
have a corporate income tax, and the same four states, along with Alaska,
Florida, and Texas, have no personal income tax. Individuals in New Hampshire
and Tennessee are only taxed on interest and dividend income.

Apart from taxing business income through a corporate income tax or a
personal income tax, many states impose a separate tax on at least some
businesses, sometimes called a “franchise tax” or “privilege tax;” this is
frequently defined as a tax simply for the right or “privilege” of doing
business in the state. As with state taxes on business income, the specifics of
a state’s franchise tax often depend in part on the legal form of the business.
Franchise taxes are generally either a flat fee or an amount based on a
business’s net worth.

As just mentioned, Wyoming is one of four states that have neither a
corporate income tax nor a personal income tax. In fact, with the possible
exception of South Dakota, Wyoming may be the most income tax-friendly state in
the country. Even state likes Nevada and Washington—which, like Wyoming, do not
tax corporate or personal income—still have other important business taxes (in
Nevada, there are taxes based on wages paid to employees and on businesses
involved in gaming; in Washington, there’s a gross receipts tax on most
businesses).

The one important exception to the general absence of major business taxes in
Wyoming is the state’s annual license tax (also known as the franchise tax or
fee). The license tax is a tax on a business’s assets in Wyoming, and applies to
corporations, LLCs, and limited partnerships. The tax is $50 or two-tenths of
one mill per dollar of assets ($.0002), whichever is greater.

Note on Multistate Businesses and “Nexus”

Our primary focus here is on businesses operating solely in Wyoming. However,
if you’re doing business in several states, you should be aware that your
business may be considered to have “nexus” with those states, and therefore may
be obligated to pay taxes in those states. The rules for taxation of multistate
businesses, including what constitutes nexus with a state for the purpose of
various taxes, are complicated; if you run such a business, you should consult
with a tax professional.